Implementation of ERP: 9 mistakes you should avoid

What Is ERP software?

Enterprise Resource Planning (ERP) is a category of business-management software which comprises a suite of integrate applications. It covers a substantial range of processes essential to the fundamental operations common to most businesses, for example purchasing, inventory and warehousing management, accounting, human resources and Customer Relationship Management (CRM). ERP integrates these various functions into one platform to facilitate easy monitoring, providing real-time data as well as streamlining and standardizing operation processes across the entire organization. No more running around between several systems: you get consolidated access to everything you need in one software.

Why should you consider implementing ERP?

An increasing number of companies recognize that a centralized system is key to minimizing the inefficiencies in managing multiple systems simultaneously (and saving yourself a headache!). Implementing an ERP system enables companies to replace previous platforms with one that accommodates evolving business practices and improves business performance.

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How can ERP help your business?

A single system effectively reduces training requirements for end-users, who only need to learn one system rather than having to get to grips with numerous individual applications. Companies can save costs by reducing the scale of technical support, infrastructure needs, and the number of application licensing.

Improved Efficiency

ERP can greatly reduce or eliminate repetitive processes, thus enabling employees to focus on value-added tasks. The system can likewise aid in the adoption and enforcement of industrial processes and lend familiarity to all actions across the enterprise.

Improved Reporting & Planning

ERP systems generate useful reports and analytics that can revolutionize the way a company accesses its data. Standard financial reports such as income statements, cash flow statements, inventory status, accounts receivable aging report and more are built-in, and custom reports can be created even by users without special programming knowledge. This means that ERP users are better able to make informed decisions based on end-to-end trends and metrics by the add-on analytic capabilities, and can even export data to other analytic platforms.

Improved Supply Chain Management

An ERP system strengthens supply chain management in a variety of ways, enabling shortened ordering times, improved demand forecasting, better inventory management, procurement and many other benefits that streamline the supply chain. It also facilitates manufacturing innovations, which can help companies reduce costs and capital requirements. For some manufacturers, ERP is an essential tool to calculate demand in raw material quantity because manual calculations are not efficient when a finished good comprises hundreds of pieces of raw material and each of them have different order lead times!

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Failure to define company needs

Companies who have not sufficiently clarified or identified their own needs may mistakenly purchase an ERP with unsuitable features. At best, some companies may end up with a high-end ERP that is capable of responding to all company needs, but at a heavy cost.

Failure to plan the implementation process

ERP implementation should comprise several stages, from preparation to launch, which in the absence of proper planning can cause implementation delays or costly issues later on. A standard ERP implementation cycle includes evaluating the ERP package, requirement analysis, project planning, business process re-engineering, training, and testing.

Poor existing data quality

Disparate systems often lead to companies having multiple entries for the same data prior to ERP implementation. In order to improve existing data quality and prepare for a single ERP system, companies should develop a strategy for merging data from multiple systems.

Lack of in-house technical support

A recurring theme in these reasons why some companies fail to successfully implement ERPs is unsuitability of features. One key approach to overcoming this is to ensure that you dedicate sufficient resources for your in-house support team, who will then be able to liaise with third-party support services. Your in-house support team has had a chance to develop a much better understanding of your organization and is instrumental in ensuring a successful ERP set-up.

Lack of strategy for testing critical tasks

It is unfeasible to test all ERP-related tasks before the system launches, however it is necessary to test the critical tasks, such as order processing, accounting functions, which form the basis of ERP implementation.

Lack of a comprehensive training programme

An ERP system won’t manage itself. Digital tools are only as good as their users. Without proper training, employees will be unable to get the most out of all the advantages that come from a single system (and are likely to become frustrated). A comprehensive training programme should be designed for employees according to their roles and respective needs. The best digital strategies include an approach to foster company-wide digital culture and adoption: the same is true

Falling behind schedule

Forward-thinking companies will keep one eye on potential developments and future opportunities. Although an ERP project may initially seem small in scale, the potential for rapid upsizing is great given the ability of ERP to cater to most, if not all, your business process. Clearly designated roles and a dedicated project manager for the whole process can prove to be very useful in the long-run.

Underestimating the magnitude of the ERP project

A loosely bound project can create additional costs and eat up available resources. Should a problem arise, a pre-defined crisis management or response procedure that addresses the issue and facilitates communication can effectively limit any domino effect.

Lack of procedure to manage change

Define an approach that will allow your suppliers and customers to get familiar with the new ERP system. Changes flung upon unreceptive recipients can have an adverse impact on business process (such as order processing workflows) and information technology.